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Types of steel are categorized by their composition and processing method. The four main types of steel are carbon, alloy, stainless and tool. All steel is composed of iron and carbon. In addition to iron and carbon, carbon steel may contain small amounts of manganese, sulfur or aluminum. Alloy and stainless steels contain varying amounts of other metals, such as chrome, nickel or molybdenum. Tool steels are made using methods that maximize hardness and abrasion resistance. The composition and the processing method determine the final properties of the steel. Prior to recycling, steel is graded by composition and size.

Steel is the most recycled material in North America, according to the Steel Recycling Institute. Scrap steel is roughly divided into four categories: appliances, automobile parts, construction materials and containers. Because of their size, appliances and automobiles are often returned to the retailer for recycling. Steel containers are used as packaging for a variety of consumer products and are commonly recycled through municipal recycling programs or through recycling centers that buy recyclable materials from the public. These products often contain multiple types of steel, and the individual parts must be separated before they can be reprocessed.